The rally in the US stock market is almost glacial. Last week’s gain (+0.58%) followed a rise of 0.34% in the previous week. Nevertheless, despite all the talk of a margin squeeze, equities continue to head higher. The September 20thpeak of 2930.75 remains a formidable, technical barrier for the S&P 500.
The economic data at least points in the right direction. The stock market could set significant new highs in the coming weeks and months. The Treasury curve may steepen, but regardless, most yields should rise modestly.
The PMIs released on Thursday imply that Q2 has got off to a very poor start, with a notable deterioration in services.
For now, these reports appear to be an outlier. The Philly Fed manufacturing survey was much stronger, with a notable rebound in new orders for this month. Retail spending was very positive, with core sales (excluding gasoline & autos) rising by 2.07% (annualised 8.5%) over the three months to March. The most significant report has been initial jobless claims, which have dropped over five consecutive weeks.
